New charity law takes effect
Today sees the transition to a new landscape for the country’s 20,000 charities as the Office of the Scottish Charity Regulator, OSCR, takes on the responsibility for determining charitable status in Scotland.
The Charities and Trustee Investment (Scotland) Act 2005, the main provisions of which come into effect from today govern how Scotland’s charities are regulated and run, placing new responsibilities on charity trustees and establishing a new legal definition of charity.
All new charities must meet a new two-part Charity Test, showing that they have one or more charitable purposes, and provide public benefit. Charities must also seek consent from OSCR for proposed changes such as amendments to their charitable purposes or a proposed change of name.
Until March, the power in Scotland lay with Her Majesty’s Revenue and Customs (HMRC).
The transfer to the new system has caused some controversy as the two-month gap in applications for charity status being dealt with put many organisations in legal limbo.
The aim of the new legislation is to reinforce public confidence in the charity sector and create a more appropriate, modern environment for the operation of charities in Scotland.
OSCR’s Chief Executive Jane Ryder said that charities and the public would welcome the new framework.
‘For the first time ever in Scotland we have legislation specifically created for the charity sector,’ she added. ‘The sector is an important part of life in Scotland, with around half the adult population involved in voluntary activities.
‘It is therefore essential that the public has confidence in the sound governance and regulation of charities, and that the charities themselves can flourish secure in the knowledge of their rights and responsibilities.’
Deputy Communities Minister Johann Lamont said:
‘The Charities Act provides a new system of regulation and gives reassurance to the public who expect that the way in which our charities operate is trustworthy and transparent. The Executive and OSCR have been working with the voluntary sector in Scotland to prepare for this day. As the independent regulator, OSCR will now be taking up its powers to determine and grant charitable status and I look forward to seeing charities thrive in the new environment.’
OSCR was established as an Executive Agency in December 2003 and in the past two years has worked with other regulators, Scottish charity groups, HM Revenue and Customs and the Scottish Executive to ensure a seamless transition to the new regime.
NEW CHARITY LAW – KEY POINTS
The Charities and Trustee Investment (Scotland) Act 2005 is the first dedicated legislation outlining the responsibilities and regulation of charities in Scotland. Its key points are as follows:
o A new Office of the Scottish Charity Regulator, OSCR, is formally established with powers to monitor and regulate Scottish charities.
o A comprehensive Scottish Charity Register, kept and maintained by OSCR, lists Scotland’s 20,000+ charities including name, principal address, charitable purposes, and annual income. This will also state whether any Notices or Directions have been given to a charity by OSCR.
o A new legal definition of ‘charity’ is established – an organisation that is entered in the Scottish Charity Register.
o It will be an offence for an organisation to ‘hold itself out to be a charity’ if it is not entered in the Scottish Charity Register.
o There are 16 charitable purposes defined in the Act, for example, ‘the advancement of health’; and ‘the advancement of human rights’.
o A new Charity Test will be applied by OSCR to all new applications for charitable status. The Charity Test will over time be applied to all existing charities currently on the Scottish Charity Register – the ‘Rolling Review’.
o To meet the Charity Test, a prospective charity must have one or more charitable purposes; and must provide public benefit.
o All charities on the Register must submit an Annual Return form to OSCR, accompanied by a copy of their most recent accounts. Charities with an annual income greater than £25,000 must submit more detailed information by completing an annual Monitoring Return.
o Where a charity wishes to change its name, change its purposes, amalgamate with another body, or wind itself up, it must seek OSCR’s consent.
o OSCR will monitor charities on an ongoing basis and has powers to intervene or conduct investigations in response to public complaints about alleged misconduct or mismanagement.
Source: Scottish Executive, Senscot